Using financial statements to create commercial customer loyalty   What makes a good business customer.... "A customer with a set of financial statements that delivers no unpleasant surprises"  Quote from a seasoned banker   Financial statements are a common bond between the banker and her business customers. Good quality numbers provides the banker with opportunity, yet very few banks use financial statements to their advantage. Helping business transform their financial statements into a powerful business tool can only be a win win for all. It is common knowledge that most small to medium sized business owners have limited knowledge as to how financial statements can be used to improve performance and reduce risk. This knowledge gap represents an excellent opportunity for banks to fill the void and build communities of interest around the bank brand. What if the banker took a very different approach? Instead of only using financial statements as part of the due diligence process. Convert these documents into a marketing tool. If the bank can provide business with an effective and easy way to analyze their financial statements that can help to improve profit, cash and returns, which business would not think that to be valuable? Our solution is to combine knowledge with technology creating a community of interest for the bank customers. Our system allows the banker to deliver at no cost to the customer or prospect, a branded version of our financial statement analysis and “what if” software. The system resides on the customer’s desktop/laptop thus eliminating any security issues.  Our interactive analysis tool will allow your customers to analyze their financial statements, measuring the impact of strategies on growth, profit and cash flow. For more information on how you can use financial statements to differentiate your banks value offer please contact Andre Gien Agien@gfbridge.com  /925-323-2802 Josh Lloyd  Jlloyd@gfbridge.com /970-264-1367 or toll free 888-755-5378   View how financial statements are used to engage customers

Financial Statement performance videos

Financial Statement Story

The methodology used in this video supported by the key conservation topics listed below provide a guide for both the business manager and the internal business advisor to communicate how past and future strategies have impacted current and future financial performance.    



One Page Communication Platform

 

 1. Measure how effective you are at converting decisions and actions into financial performance

 2. Convert all the various financial statement documents into a One Page interactive Scorecard

 3. Do any form of "what if" .... KNOW BEFORE YOU DECIDE.

  a. What if we grow will this create more or less cash

  b. What if we add additional products or services will this improve our profit and cash to the point where the reward exceeds the risk

  c. What if we increase our staffing levels how much additional revenue do we need to do this

  d. What if we improve our supply chain will the benefit exceed the cost of doing it.

  e. What if we increase our marking spend how much additional revenue and cash do we need to make it happen.

  f. What if... create your own circumstance and GFB will measure the result

 4. Deliver the critical performance measures to your team that are aligned to the required financial statement performance

 5. Guides management as to what should be focused on.

 6. Quantifies where the inefficiencies are. "What's fat and what not"

 7. Automates the whole budget process producing the projected income statement, balance sheet and cash flow for one or multiple future periods.

 8. Stress test future strategies and modify any budgeted period which strategic changes.

 9. Deliver future assumptions that guide management performance

 10. Produce historical and future financial reports

 11. Create user defined performance measures that are applicable to your business model.

 12.  Provides a powerful way to deliver your performance in board meetings, senior management meetings and strategic planning meetings.

Other good to know stuff

 1. Imports directly from Quick Books® and excel

 2. Inquire about our 20 week video course on how to create the financial statement performance discipline

 3. Cost $600.00 per annum for the software management tool

 4. Training is $600.00 for a 2 x session in person web delivered course (each session is about 2 hours)

 5. Total online help video system

Please let us know how we can power your intuition with the rigor of evidence

 

Superior Financial performance

http://youtu.be/Ng498wKHSFw

Financial statements are the only business measurement system. How effective you are at using these documents to guide you towards doing the right things, can be the difference between failure or great results.

 

Return on Capital Employed

http://youtu.be/k_y0Sf5U0u8

The ROCE story creating performance based financial statements

How Return On Capital Employed (ROCE) can be a great way use your financial statements to evaluate how business outcome impact the ability to create wealth.

 

Creating Superior Profitability

http://youtu.be/owB4pUPym3g

Here we only focused on the income statement and how can instantly identify dysfunction between Vanity and Sanity. We will leave the interests of King for another day.

Vanity is REVEUNE, Sanity is PROFIT and CASH is King

We take a standard income statement and balance sheet actually about 30 numbers and convert them into an interactive one page financial scorecard.

 

 Are we cash absorbing when we grow our business

http://youtu.be/KkW47BEueGs

 Does your business absorb or generate cash when you grow

You are presented with a standard set of financials which contains the answer... so what is it. Well that the problem it's not easy to know let's see how we can instantly identify the answer in the One Page Financial Scorecard

Gain insight into as to how the combination of income statement and balance sheet management techniques work to answer this question

 

Good debt vs Bad debt -Considering how to formulate a corporate debt policy.mp4

http://youtu.be/JoUeFKTWHtg

Do we have good or bad debt

 

You must agree this is an interesting question... we think a lot about it but very seldom seek an answer.

 

Can debt be good and what is the conditions precedent for this to be the case?

 

Let's use Global Financial Bridge www.gfbridge.com  to see if there is an easy way to reveal the secrets between good and bad debt.

 

As a starter what is our strategy when dealing with how much debt we should or should not have... I will provide a prospective the end of the video

 

Financial statement communication and analysis

http://youtu.be/7OmgP4TBaqo

Using the one page scorecard to integrate the income statement and balance sheet with the 5key focus areas of growth, profitability, balance sheet management, cash and returns

 

Projecting the future

Measuring financial statements budgets and projections against profitability, cash and return on capital. Enabling the identification of where future value will be created using Global Financial Bridge www.gfbridge.com

http://youtu.be/S0DuCQx606I

Good Growth Part 2

http://youtu.be/Eo5uNVcZpRY

How growth can create or destroy value

A Company’s Financial Statements Tell an Important Story … Can Management Successfully Communicate That Story?

I.          Introduction

    

 

            The Key to a Company’s Survival … Sustainable Free Cash Flow & The Discipline of Financial Performance

 

At this time, company management is asking itself the obvious critical question: “what can we do going forward to maximize the company’s ability to weather this downturn and to thrive in better times?”  The not-so-obvious answer to this question is that the company should focus on achieving sustainable free cash flow.  A company can achieve sustainable free cash flow if it commits to and properly executes the discipline of financial performance (explained below). 

 

            Sustainable Free Cash Flow To Satisfy Banks’ Heightened Lending Standards

 

A company’s survival, let alone success, is tied largely to the ability to manage cash flow.  No doubt this axiom will be tested and reproved in spades as the current global financial and economic maelstrom runs its course.  Arguably, companies have a greater ability to increase cash flow from operations than they do from financing activities.  A company can, for example, take action to collect accounts receivable and improve inventory turnover (operations), but companies cannot force banks to loan money (financing).

 

 

 

II.        The Discipline of Financial Performance

 

            A Company’s Performance Gap (Gross Potential – Current Performance)

 

            “Gross potential” is a financial metric that can derived by management effectively communicating a company’s leading indicators or core competencies (read: how well a company can do). A powerful example of a core competency which is often neglected is what we call “common knowledge” which is founded on the principal that knowledge is power but if critical business knowledge is housed within select organizational functions automatically restricts the “knowledge power”. This common knowledge can be segmented into

• Business strategy knowledge
• Process knowledge
• Information access capabilities
• Policy knowledge
• Measurement and expectation knowledge
• Financial performance knowledge.

 

The greater the degree of common knowledge throughout the organization the more effective the business is in getting things done the right way. Creating a systemic way to maximize common knowledge is a critical foundation to all core competency development or enhancement and thus reducing the “blind spot risk”.

 

(Note:  The process for management’s communication of financial statements is discussed below.)  Financial statements, however, are a lagging indicator of a company’s current performance (read: how well a company is doing).  They essentially paint a backward-looking picture based on a company’s financial and operating performance during the most recent fiscal period.  The “performance gap” represents the difference between a company’s gross potential and its current performance. 

 

The Root Causes of the Performance Gap: A Company’s Organizational Blind Spot & Absence of Standardization in Financial Statement Analysis and Interpretation

 

The performance gap is attributable largely to a company’s organizational blind spot.  This organizational blind sport is rooted in the common practice (in many companies) of allocating management responsibilities among several individuals.  As a result, more often than not, senior managers:

 

·         cannot understand, individually, in any transparent manner how each of a company’s individual operational segments impact on the company’s aggregate financial and operational performance, and

·         do not have a clear understanding of how a company’s financial statements (i.e., balance sheet, income statement and statement of cash flows) interrelate with and impact on one another.   

 

There is no standardized way to analyze and interpret a company’s financial statements to communicate the company’s gross potential.  The absence of standardized financial communication tools, in turn, has, among other things, two notable adverse effects on a company:

 

·         it compounds the challenges of a company’s organizational blind spot fundamentally; and

·         it impairs management’s ability to gauge a company’s performance gap and to therefore develop and implement strategies (that would increase its profitability, cash flow and return on investment) to achieve financial performance.

 

To this point, in identifying a company’s organizational blind spot and performance gap we have (so-to-speak) diagnosed the problem.  Now we must now turn to the all-important next step – the solution – the roadmap for company management to overcome the organization blind spot and to achieve the company’s gross potential.

 

III.       The Discipline (of Financial Performance) to Achieve Gross Potential

 

Interactive Real-Time Financial Management Communication – The Performance Gap Cure

 

            At its core, the discipline of financial performance is about two things:

 

·         a powerful organizational learning platform that connects management to the company’s financial statements; and

·         company management (via this platform and connection) interactively and in real-time communicating the company’s financial statements to make optimal business and operational decisions.

 

In order to be effective, this organizational learning platform must include the following fundamental components:

 

·         relevance – people connect to learning that will enhance their ability to perform and their career;

·         real-time feedback – instantaneous feedback on potential strategic decisions;

·         interactivity – simulation of hypothetical scenarios without consequences, which promotes creativity and innovation;

·         simplicity – delivery of complex material and information easily understandable format;

·         familiarity – personalization through the use of a company’s current financial information.

 

The interactive and real-time communication of the company’s financial statements will, for example, significantly improve management’s ability to evaluate whether a strategic decision to create or destroy cash or reduce corporate waste.

Global Financial Bridge, LLC and the One-Page Scorecard

 

Global Financial Bridge, LLC has created such a platform in the form of a one-page scorecard (illustrated below), which among other things:

 

·         transforms a company’s standard financial statements into an integrated environment, and communicates all of the financial statement components in a single platform; 

·         provides for interactivity and real-time feedback through calculation and analysis of robust what-if scenarios and stress testing capabilities; and

·         incorporates a net change capability that isolates the financial impact of a strategic alternatives (or alternatives) and illustrates simply how the income statement, balance sheet and cash statement changed and what the drivers created the change.

 

In our experience, those companies that have truly committed to and properly executed the discipline of financial performance have overcome successfully their respective organizational blind spots and performance gaps and achieved their gross potential.

 

 

Vendor payment period

The last of the working capital trio. How to calculate your accounts payable days or vendor days outstanding

We take the amount we owe to our vendors at the end of the period and divide it by the COGS (including the direct shipment COGS)[i]. We then multiply the result with the trading days represented in the total COGS.

Accounts payable or vendor days outstanding are useful when wanting to compare your inventory holding with how quickly you pay your vendors. If you not taking settlement discount, your payable days should exceed your inventory days.

---

[i] Remember when we calculate inventory days we exclude direct shipment COGS from our inventory

Show me a business that

Show me a business that deploys sound financial statement disciplines  and I will show you a business that outperforms any of its peers.

 

Yes you heard right, financial statements and performance go together.

 

The secret is how these financial statements are used to drive performance. If deployed in the right way financial statement create the guiding light called FOCUS. We call this the Financial Performance Discipline.  (FPD).

 

Your financial statement are a powerful competitive weapon if used in the right way. The Financial Performance Discipline (FPD) combines structure, methodology and technology that ensures organizational focus on  the right thing.

 

This may sound a like a big job with a high price tag, actually it requires one hour a month, and 3 hours a quarter and can be installed and fully operational for $1,200. (includes the financial statement management software plus the training to get you up and running). The FPD is integrated as part of your management meeting and best of all it is driven by you.

 

The Financial Performance Discipline will guide you from "how well you are doing" to "how well you can do". Creating a performance culture that:

 

• Is measured and accountable
• Developed around 5 focus areas
• Structured and disciplined
• Makes strategy aligned with financial outcomes.
• Integrates and forces ALL key manages to make decision that positively influence the income statement, the balance sheet and the cash statement

The FPD is not the domain of the CFO or the controller it is a management system that impacts and influences all key managers in the business. THE FPD ensures all managers are aligned with the right financial outcomes.

 

If you are prepared to commit  3 hours of training and installation to transform your business based on measured accountability

Please Contact agien@gfbridge.com 925 323 2802

Using common knowledge to manage risk

The power of knowledge is well known to all of us. How we distribute knowledge within our business can be a very efficient way of managing risk. If critical business knowledge is housed within different  organizational functions without a conscious way of sharing the knowledge creates these  “knowledge power” islands within the business.

 

He or she who has the knowledge, has the power and how this power is used can be for the good or be most harmful. Information technology departments often use this knowledge power to their advantage either unconsciously  or other wise to dictate what will be done or wont be done whether it is for the common good or not.

 

Another example of knowledge power may be found in the finance department. The knowledge of how certain decisions impact both the income statement and the balance sheet can significantly change the decision. Often these core concepts are not shared with significant consequences that could have quiet easily have been prevented in the first place.

 

This might be a good time to introduce the "blind spot" which can be defined as knowledge know by some, but not by others.

 

The blind spot will always be there but how well we create an environment for common knowledge to manifest itself will be an important factor in reducing the blind spot risk.

 

 in order to do your common knowledge audit. Please consider how each of these business systems empower knowledge sharing.

•        Business strategy knowledge

•        Process knowledge

•        Information access capabilities

•        Policy knowledge

•        Measurement and expectation knowledge

•        Financial performance knowledge.

 

The greater the degree of common knowledge throughout the organization the more effective the business is in getting things done the right way.

Financial performance manager - myth or reality

Financial performance manager - myth or reality

 

Perception is often the reality. The CFO of yesterday was required to measure , report and control HOW WELL WE ARE DOING. The CFO of tomorrow is about HOW WELL WE CAN DO. Then problem is that many organizations manifest the yesterday culture even irrespective of how the incumbent CFO wants "to do things around here" 

 

The difference between how well we are doing and how well we can we can do can be described as the organizational performance gap. For the purposes of this discussion let call how well we can do as the organizational GROSS POTENTIAL. It would then be the job of the performance manger to identify the performance gap and move the business towards the gross potential.

 

We are now faced with the potential dilemma to create a methodology of defining the gross potential. One way that this could be done is by defining what are the required core competencies required to drive superior competitive capabilities.

 

These core competencies are or completive capabilities can be segmented based on the respective business model. In general examples of these core competencies could include.

• Customer core competencies that in turn would divided into customer growth capabilities and existing customer growth and management  capabilities.

• Value offer core capabilities represented by those capabilities to create superior value to the targeted customer. Once again the subdivision between existing value offers be they products or services or a combination of both and the development of new value offers.

• Channel core competencies reflecting those capabilities to develop and maintain effective access channels to serve the targeted customer

• Strategic relationship core competencies which enhance the capabilities to compete effectively

• Business process, technology  and policy capabilities
• Learning and growth core capabilities required to develop employees and the tools they use.

In the heart of these capabilities would be how they influence and impact financial performance.

 

Gross potential would thus be the sum of the what these capabilities should be. The performance gap would be the differential between the current state and the desired state.

 

The job of the performance manager becomes somewhat more systematic. She would target the those capabilities with the largest gap. 

 

Your job until we meet again is to identify your performance manager , empower him or her and attain a clear definition of your required core competitive capabilities.